60 MINUTES: GE'S CEO, JOHN FRANCIS WELCH JR.
"Big Companies Will Be The Biggest Beneficiaries Of The Net"
He's the gold standard of CEOs. GE's John Francis Welch Jr. was in India to renew his acquaintance with a market he claims has exceeded his expectations ''in terms of intellectual capital'', meet with customers and employees, and inaugurate GE's largest research centre outside the US (in Bangalore, and it's named after the man). He spoke to BT's R. Sridharan and R. Sukumar on GE's plans for India, its e-biz initiative, and the characteristics that make it a unique company. Excerpts from an exclusive interview.
Q. Can you tell us about your plans for India?
A. I'm not the guy with the plans; the guy with the plans is on my right (gestures to the head of GE's Indian operations, Scott Bayman). I'm the guy that thinks India is the place to be, because of its intellectual capital. We are opening a big new laboratory in Bangalore. Everyone of our business is represented here. We have an enormous medical business. (GE) Plastics is strong. The Dabhol power plant (one of GE's customers) is doing pretty well. What have I left out? We have a great (GE) Capital business here, growing rapidly. So we'll continue to push those.
At the same time, we will continue to utilise the great talent here. I started coming here 12 years ago, and I had great expectations from the market. A large middle class, etcetera. I had great impressions of the people. I think that we are only over a billion dollars (the approximate combined turnover of all of GE's businesses in India) right now. So, our growth has been modest in terms of the market. It's been slower to develop than I thought. But on the intellectual front, it's been much better. Much richer than I would have thought. India has ended up being the second-largest intellectual centre for GE outside of the US. So, India from an intellectual standpoint has far surpassed my initial expectations; and from a market standpoint, I've fallen short. But I'll be patient. Scott will be patient. We will be here a long time. And we will grow. We had a big number this year, I think. (looks at Bayman who says: ''We did. That reminds me of the strategy we coined when he was here last time. It was patience and persistence.'')
Do you see any major change in the business environment in India?
Scott tells me that approvals are faster and easier. There's still too much bureaucracy, but it is better than it was. If you can ever unleash these people who are so good (sighs)... what a country! If you can only unleash them here; if there's venture capital money; if there are all those things.... A country so rich in its talent, and so impeded by its chains. But it's getting better.
Ever since you have taken over at GE, it's been one growth driver after the other. First, it was globalisation. Then services. Then it was Six Sigma...
And now the Net.
GE seems to have embraced these drivers with an almost religious zeal. When you get religious, you can get religious once. But to get religious four times over, what kind of organisation does it take?
It takes a culture. First of all, it takes hiring great people, and we have great people at all levels of the organisation. Secondly, it takes dedication on the part of the management. I'm not talking of one person-I'm talking about 140-150 officers to commit themselves to this effort. To believe in it. To go after it. Finally, it takes a company that, in 20 years, has four initiatives and not 400. So if you have one every day or every month, you won't make it.
Today's revolution, the Net, will, by far, have the biggest impact on our company. It will touch everyone. It will change the way we work. We have our officers meeting in October. There'll be 135 officers at Crotonville, New York. The first day will be all about e-business. All about the buy side, the make side, which is getting increasing emphasis, and the sell side. The second day, though, will be about globalisation, services, and Six Sigma. They'll each get a third of a day. Every one of our initiatives starts out like this.
Globalisation. We're going to sell products. Then we are going to build factories and make products to sell in those countries. Then we're going to buy goods from those countries to serve those factories. Then we start buying them to export to other countries, because they're good goods. Then we start using design-metallurgists in Czechoslovakia; design engineers in India. Now we see that it has expanded to R&D and intellect. When we started out, we didn't think we would be going for intellect in globalisation.
Services. We saw we needed our best technologists in service. If I sell you a turbine or a medical equipment piece, you'll like me a lot more if I don't come back two years from now and say to you: ''Hey, I got a better one.'' You'll like me a lot more if I come back to you and say: ''Keep your cat scanner right there, here's a piece of software for it that will help you get twice the throughput and three times the images." Productivity for the customer became an enormous part of the services thing.
In fact, we didn't begin by thinking that way. But, because we have this company that is looking for a better way every day... It's a badge of honour to take someone's ideas, not reject it. That may seem like a little thing. It's a HUGE thing. I brag about the ideas we got from Motorola; from Hewlett Packard; from Toyota. So people get the feeling that getting an idea is a great thing.
But how do you build stability of vision when you are acquiring companies by the hundreds each year?
Very quickly. We have integration teams that are on them right away. Some people leave if they don't like it, some people love it and stay. But we don't fool around. That's a lesson we learnt over the years. We used to say, ''Well, they are entrepreneurs, they've got their own thing''...we don't do that any more.
Take Six Sigma. When we started that, it was all about productivity, about doing things better, and then it moved to designing products more effectively. Now it is Six Sigma for the customer. Our black belts are living in customer shops, helping them improve their businesses. Who would have thought of that when we started Six Sigma?
So, each one of these ideas swells into a much bigger idea. Take the Net, for example. When we started out, we copied the dot.coms. We were buying goods and we were selling goods. We did not recognise that the real opportunity lay in the making of goods. That's why the big old companies are the biggest beneficiaries of the Net. We (already) know how to make products, and we know how to fulfil products. That's the hard part. What we didn't know was how to digitise it. Now you digitise it and you win big, because you've got all the inefficiencies out of the system. But again, we didn't start that way. We started with an auction site, buying stuff and selling it. Now we are just possessed by the make part.
How do you manage to proselytise your people so fast? Until last year, the buzz at GE was Six Sigma. Today, it is the Net.
I have a great team of people. And we are able to come to this conclusion that we are going to do something together. I only convince them to do it. They, then, go back and convince their own people.
We have a system not unlike a computer's operating system. It starts out in January in Boca Raton (Florida), where we give the message to 500 of the top managers. Then, in March, the Corporate Executive Council (CEC), which is 30 people, checks progress on the initiative.
We are talking about ideas, the ones they've (the 500 key people) come up with. Then we go out and review them. And we spend 15-16 hours a day on each point. And we interview the leaders of the initiative. They make a presentation to us. So, we say: ''Hey, may be there are some good people, but may be there are some turkeys leading the initiatives.''
In June, we have another CEC to follow up. In July, we go over the initiatives again. We have a video-conference-two hours with each business on the people process. ''What did you say you were going to do in April and May? Did you do it by July?'' But the people process is not separate. It is tied to the things we said in January. In September, we have another CEC, and we go over the best practices. By now, new ideas have come out, people grab them, and go with them. In October, we bring out the best examples of what was said in January-about 30 ten-minute presentations by people who demonstrated role-model behaviour on the initiative. So, everything flows from this (continuous review). When I ask my people what's different about GE from where they came from, they'll say it's the relentless consistency.
What kind of a company did you take charge of in 1981 and what kind of a GE will you leave for your successor in April next year.
I took over a good company in 1981 that a whole lot of us made better. My successor will take over a great company in April and make it much greater. And that's what the job is all about.
Is Wall Street still refusing to come to terms with GE as a digitised corporation?
If you look at our price-to-earnings multiple (50), it's quite good. We are very happy with it. We always think that the stock is too low, based on what we know. But every company in the world, I am sure, feels that way. We couldn't be happier; we are No. 1 in (terms of) market cap today.
A final question. What really does Jack Welch think of Jack Welch?
Well, I've always been the same person I was in high school. So, I am not any different. I am surprised that people interview me. I wonder who that person is in the suit who does the talking.
It's true. People meet me in ball games and shake hands with me and stuff like that. I am stunned every time. I still hang around with guys I hung around with in high school. I don't have any great self-impression.
I am very comfortable with myself. But I am sort of stunned by the whole game. I don't know what else to say.
© Living Media India Ltd